MUMBAI: The Indian media and entertainment industry is dangerously tilted towards advertising revenues across segments and for it to considerably scale up, subscription models have to mature.

Consumers need to pay more for their entertainment if the sunshine industry is to grow at the pace it should.

"There are no companies of scale in that sense. The biggest problem is that all the segments are heavily dependent on advertising revenues. Even in movies, the sale of theatrical rights to broadcasters is a significant revenue stream - and the channels are dependent on advertising. The industry has to evolve subscription models," said UTV Software Communications founding chairman and CEO Ronnie Screwvala, while delivering the valedictory address at Ficci-Frames 2011.

Consumers do not want to pay for the content that they consume. “Due to this, the industry is heavily dependent on advertising revenues. Almost 80 per cent of the revenues come from advertising and this is the problem with all the models. You have to develop other revenue streams like subscription,” Screwvala said.

The industry is just $15 billion now and should be growing at least 20 per cent.

“With the given scale of the media industry, we should be growing at 20 per cent or even more like the other sunshine industries,” said Screwvala.

Emphasising on the need for scale, he said that the media and entertainment industry would attract talent only when there is scale.

On the rampant piracy prevalent in the film industry, he noted that it is restricting the sector to a mere 7 per cent growth rate, which is "actually a de-growth if you take into account the inflation rate".

He said the stakeholders need to put up large sums of money upfront to fight the menace of piracy. The proliferation of piracy was primarily due to the lack of enforcement - and not lack of regulation.

Talking about the way forward, Screwvala said the industry needs to move from an advertising-led growth model to subscription-led growth, undertake research into audience preferences, ensure enforcement of anti-piracy laws, and innovate to make it a truly creative business.

He also said that there is need to segregate gut feel from research in trying to find out what the audience want. He urged the younger players in the media and entertainment business to regard research as a good guiding force, by which one could pre-empt what’s going to be a hit or otherwise.

Screwvala was gung-ho about new media and said the introduction of 4G spectrum would be a “game changer”.

"But let us not waste this opportunity. 4G should be developed as a subscription-led and not ad-supported model," Screwvala warned.